Ever increasing frequency of major vessel casualties reported by International Union of Marine Insurance

Increasing frequency of major vessel casualties is causing concerns for underwriters says the International Union of Marine Insurance
Increasing frequency of major vessel casualties is causing concerns for underwriters says the International Union of Marine Insurance

Statistics released at the International Union of Marine Insurance Annual Spring meeting in Hamburg have raised a series of issues that will continue to challenge marine underwriters for the foreseeable future.

The frequency of major vessel casualties rose again in 2016 for the second consecutive year reports the International Union of Marine Insurance. They had enjoyed a year-on-year decline until 2015 when they recorded a sharp upturn which was continued in 2016.

Accumulation losses both on board ship and in port also continued to cause concern for cargo underwriters.

The new generation Ultra Large Container Carriers, capable of carrying 20,000 TEU with a potential cargo value estimated at $985 million, are a cause for concern. This represented a significant risk for cargo underwriters and one that continued to increase. Put in context, MSC Flaminia which suffered a fire in 2012 carried a cargo valued at $115 million.

Accumulation risk in ports, particularly Chinese ports, was thought to be even greater. It was estimated that the value of cargo throughput at Shanghai could reach $1.6 billion a day, Shenzhen $681 million and Tianjin $477 million. The explosion at Tianjin in 2015 also resulted in a significant loss but might have been much worse. The total cargo estimated to be onboard the 754 ships in the port on the day of the incident would have amounted to more than $53 billion.

Commenting on the issues raised, Donald Harrell, Chairman of the International Union of Marine Insurance Facts & Figures committee said; “Marine risks continue to grow both in size and complexity and it is vital that underwriters fully understand the potential losses that they are being asked to insure. It is gratifying to see the year-on-year decrease in total losses, but we must take particular notice of the recent increase in major casualties and the reasons for this.”

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